NZD/USD: Head and Shoulder Levels – Trade Closed

Trade Closed: 2012-08-17 3:27
Phew! That was a nail-biter, that one. Although it seemed that the odds were against this trade, look how I managed to escape with only a little scratch!

NZD/USD came within a hairline of my stop at .8125 when the US printed mixed data yesterday. On top of that, it didn’t help my short trade that risk was on after Spanish bond yields dropped and Merkel pledged extra support for the euro.

However, resistance near my stop held and the pair eventually dropped back down. I waited for a bit so that I’d be able to exit ahead of the weekend.

NZD/USD Trade Closed

Luckily, the pair dipped back to close my entry and I was able to close with only a 0.14% scratch.

I know that at lot of you were also disappointed that NZD/USD didn’t fall as much as we expected yesterday. Don’t worry, we’ll get ‘em pips next time!

Trade Update: 2012-08-16 1:40
Aaaand I’m in!

A couple of hours earlier I finally saw an opportunity to short NZD/USD. On the 1-hour chart I found not only a falling trend line, but also a bearish divergence and a possible 50% Fib retracement. Talk about the signs lining up!

On the fundamental side, I saw that New Zealand’s manufacturing sector went into contraction last month with a 49.4 reading, its lowest in three months. Apparently, weak demand, inventory adjustment, and a strong New Zealand dollar are weighing on the investors’ optimism.

NZD/USD Trade Update

Thanks to those reports, I shorted at market (.8075) using 0.50% of my account. This time I’m using a 50-pip stop loss so it’s above the falling trend line and the previous week low that we had marked in our Comdoll Trading Kit this week. I’m hoping that the pair would go down by the same height as our head and shoulder pattern, but for now I’m placing my stop loss at the .8000 major psychological support.

Here’s a recap of my trading plan!

Shorted 0.50% of my account at market (.8075) with a stop loss at .8125. Initial profit target at .8000, but I’ll be looking to move initial stop to break even and add to my position is price goes my way.

What do you think? Will this land us pips this week?

Trade Idea: 2012-08-15 9:18

Good day, trader buddies! Since I’m still hurting from my AUD/USD loss last week, I’ve decided to be a little more cautious before jumping in trades this time.

Currently, I have my sights set on a potential retest of the broken head and shoulders neckline on NZD/USD. I’ve been chatting some of y’all up in my Happy Corner for Kiwi pairs and it looks like a bunch of us were watching that reversal chart pattern on NZD/USD’s 4-hour time frame!

NZD/USD Trade Idea

Thanks to stronger than expected U.S. retail sales released yesterday, the pair tore the neckline down and resumed its downtrend. It looks like Kiwi bears needed to pull up for a quick retracement though, and the 50% to 61.8% Fibs look like potential resistance levels since they are close to the neckline.

We’ve got a few U.S. reports on tap for today and I’m inclined to think that the U.S. dollar could react to fundamentals, which means that stronger than expected U.S. data could be positive for the Greenback. On top of that, there could be increased demand for the U.S. dollar during the days leading up to the Jackson Hole Summit as the Fed seems more and more unlikely to implement QE3.

So, what do you think of this potential setup of mine? Do you think it can help me bounce back from my loss last week?

You know how I value your thoughts and suggestions so don’t be shy to drop a line or two in the comment box below or chat with me through any of these accounts:

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Have fun and good luck trading this week, friends!

Happy time

Other Popular Articles:

AUD/USD trade What is the STA strategy? Q2 2012 in Review Comdoll Trading Kit (August 13-17, 2012)

36 comments

  1. trade forex

    I actually joined a several time ago. Been viewing it for a while. I saw a bearish divergence on the 4h maps and came here to see that you discovered one on the 1h maps also, appears to be excellent to me.

    Reply
    • Happy Piphappypip Post author

      Oh man, it looks like the overall trend was still up on the daily though. Let’s catch a better setup next time!

      Reply
  2. Topdogmutly

    I actually entered a couple hours ago. Been watching it for a while. I saw a bearish divergence on the 4h charts and came here to see that you found one on the 1h charts also, sounds good to me. Fingers crossed.

    Reply
  3. Lorenz

    I would not give up yet: I reduced the position at breakeven, but still keep my short alive. I think there is still some room to 0.8035.

    Reply
  4. Mostwantedpip

    Happy pip as i am typing this, it looks like its going against you. Its at 81000 dead right now and i am sincerely hoping its reverses back down to give you many pips your way! :(:(

    Reply
    • Happy Piphappypip Post author

      Oh man, it looks like it’s headed north! Do you think I should exit early and just cut losses?

      Reply
      • Mostwantedpip

        I am happy you managed to get out of this, relatively unharmed. Just shows that forex takes no prisoners. :(… Until next trade.
        May the pips be with you

        Reply
  5. Lorenz

    I would be careful, since we are in any case above the (raising) SMA200 in H4 and D1. This setup would imply that: 1) the price breaks this level 2) We have a reversal.

    Reply
  6. jamessheppard

    Hi Happy pip. I am short now on this same set up. I actually shorted once it broke through initially. I am hopeful that it should work out nicely. Have you entered yourself yet?

    Reply
  7. blseven

    Hi guys, just sharing. to me the best entry point had passed few days ago at 8160 when it broke the uptrend. that’s my style of trading. this moment when i’m posting its actually a critical moment/bar. if today it closes above in green and didn’t have lower lows, then it’s considered break out of the short term down trend. if it continues then congratz, it will have a good chance to reaching 8000. my 2cents worth, cheers. :)

    Reply
    • Happy Piphappypip Post author

      Thanks for the feedback! Unfortunately, I wasn’t able to catch that drop from .8160 so I’m just hoping to hop in a retracement this time. Hopefully it does reach .8000!

      Reply
      • blseven

        are you an asian on asia timing HP? and i didn’t know nzd had such lovely good trending patterns till i see your posting. will keep more look out for it in future…this is a good steady currency man…thanks fr binging my notice to it with your posting haha

        Reply
        • Happy Piphappypip Post author

          Well I watch the charts mostly during the Asian session since comdolls tend to be more active around that time, AUD and NZD at least. See you around!

          Reply
  8. Phill

    Been watching the same neckline for a long time myself. Currently in short with a small amount. Concerned that it may retrace all the way back to .81 first – which fits with the weekly S1 on my chart. Watching price action and listening to the news before I go in full-hog. I agree – probably good USD news coming and no QE3. If it goes in our favour I’ll be looking very closely at .8025 for clues as to where it’s going next.

    Reply
    • Happy Piphappypip Post author

      Good call! I shorted with a small amount myself. Let’s see how it goes and good luck to both of us!

      Reply
  9. Pipster4lyphe

    Hey Happy…even tho I’ve been off the scene for about a year, I’m back.
    I’ve spot the same set up as well…and def 38.2% is an excellent entry area…I entered @ market since I had already drew my Fib on the daily and the 38.2% lines up perfectly with the neckline of the H & S pattern…..Let me know what your TP looks like.

    Pipster!

    Reply
    • Happy Piphappypip Post author

      Hmm, I’m thinking of aiming for the .8000 as my ultimate profit target but I’ll definitely make some adjustments (lock in some profits? move my stop to entry?) once it falls back to its previous lows around .8025. How about you?

      Reply
  10. Forex trading guide

    It was a excellent installation. I think the everyday data was against us from the get go though. Just created an quit with a few pips, so at least it provided us to opportunity to create right

    Reply
  11. Topdogmutly

    Cheer up guys, thats what the market does. It was a good setup. I think the daily chart was against us from the get go though. Just made an exit with a few pips, so at least it gave us to chance to make right.

    Reply
  12. Megaforex

    Hi the nzd had been loosing ground since last week. And yes I think is a good idea to enter short when it reaches a resistence, but the daily trend is still up for the nzdusd, but is getting weaker, will see.

    Reply
    • Happy Piphappypip Post author

      Yikes, it looks like you’re right and the pair is still headed upwards. I should probably cut my losses now… What do you think?

      Reply

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